Laurent Kssis at LaBranche Structured Products Europe (LSPE) discusses European ETF trades for the week ending 7 January
European aggregate bond products remained the clear focus of interest for LSPE clients in the first week of 2011. Products such as the iShares Barclays Capital Euro Aggregate Bond ETF took over a third of our creation orders, with iShares accounting for $40m of that.
Emerging markets are also still experiencing positive patterns, with iShares MSCI Emerging Markets and MSCI Eastern Europe 10/40 funds, as well as ETFs focusing on Malaysia and Indonesia ETFs, all benefiting. Even though Russia was closed for trading last week, demand for Lyxor ETF Russia was strong, with LSPE creating a fifth of the fund's primary volumes.
Global indices moved marginally higher last week, outperforming the US. This week sees the release of several macro indicators in the US, including CPI, Retail Sales and Industrial Production, all of which come out on Friday, while US stock exchanges will be closed next Monday.
The first trading session of 2011 began wit a bullish move similar to that seen at the beginning of December, as inestors looked increasingly confident that a more robust economic recovery lies ahead. This upturn has since tapered off, with global indices looking mixed during the week as resource stocks come under particular pressure from commodity price declines.
The first week of 2011 saw inflows of $500m into the five top ranked ETFs. LaBranche saw inflows of $25m into iShares S&P 500 ETF, contributing to total net flows into the fund of $121m. This movement helped boost the ETF's AUM back to the level it was at when iShares lost its exclusive licence with the index provider. The iShares MSCI Emerging Markets and DAX (DE) ETFs also retained their positions within the top 5 funds, taking in $155m over the week. These figures came ahead of US unemployment data showing a better-than-expected rate of 9.4%. Down from 9.7%, this statistic signifies the largest one-month decline since 1988.
LSPE also saw a flurry of buyers in funds tracking the DJ Stoxx 600 banks, a trend not seen since 10 October last year. DJ Stoxx 600 utilities fared less well, with large numbers of sellers throughout the week following an overweight to hold recommendation from investment banks.
Outflow trends remained little changed, with the most redeemed fund continuing to be iShares EURO STOXX 50 (DE), which this week saw outflows of $240m. While LSPE saw decent buys in iShares FTSE EPRA/NAREIT Developed Markets Property Yield Fund, that ETF also saw net outflows.
Finally, we saw sellers in gold - particularly ETF Securities' Gold Bullion Securities ETF - and buyers in the iShares eb.rexx Money Market ETF and Lyxor ETF Euro Cash, where our volumes were over €100m. Lyxor reported flows in excess of $100m into its Euro Cash fund.
This report is not an offer to sell or a solicitation of any investment products or other financial product or service, an official confirmation of any transaction, or an official statement of LSPE.
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